Yahoo (YHOO) loses 7 cents to $14.32 and a noteworthy trade is a Jan 16 – 20 (1X3) call ratio backspread at 22 cents, 5000X on PHLX. Looks like the strategist sold 5,000 Jan 16 calls at 49 cents to buy 15,000 Jan 20 calls at 9 cents. It might roll or close a position, as open interest is sufficient to cover. This play makes profits if YHOO stays below $16 and all the calls expire worthless. In that case, the strategist keeps the credit. However, profits are also possible if shares see a dramatic move higher because three calls are bought for every one sold. The upside breakeven at expiration is around $22. However, profits are also possible if the stock makes a big move sooner.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.